Nintendo Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Last week saw the newest annual earnings release from Nintendo Co., Ltd. (TSE:7974), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of JP¥1.7t were in line with what the analysts predicted, Nintendo surprised by delivering a statutory profit of JP¥421 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Nintendo

Following the recent earnings report, the consensus from 21 analysts covering Nintendo is for revenues of JP¥1.45t in 2025. This implies a definite 13% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to dive 29% to JP¥301 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥1.60t and earnings per share (EPS) of JP¥319 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the JP¥8,617 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Nintendo analyst has a price target of JP¥12,000 per share, while the most pessimistic values it at JP¥6,100. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 13% annualised decline to the end of 2025. That is a notable change from historical growth of 6.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.4% per year. It's pretty clear that Nintendo's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Nintendo. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at JP¥8,617, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Nintendo analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Nintendo has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.